07 March 2014

On Johan Santana and Why No Signing Is Risk Free

"Risk Free" is a term that has been bandied about when discussing the past two signings the Orioles have made. When used with Nelson Cruz, the concept of something being risk free is simply absurd. Investing almost 10% of your team payroll in a player is a risk. It is an immediate risk because that money could be spent on other players either via free agency or in a trade. It is also a future risk because it reduces money to be used for the draft, international free agents, or team infrastructure. Nelson Cruz is not a zero risk. Now, you can argue that he is a minimal risk. I can understand that.

The Johan Santana signing is a much fainter shade of risk, but, again, it is not risk free. Even right now at this very moment it is not risk free. Let us take a look at the likely contract:

If Santana hits all of his marks, he is likely to reach a contract worth 7.64 MM. There is an extra 950k in his deal, but it is unlikely he will be able to make starts 22-25 even if he was healthy and able to make his start every trip through the rotation. I will explain a little bit about each part of his salary.

Roster Bonus
With this CBA, minor league free agents who receive an invite to the big league camp receive a 100k bonus for being sent down to the minors after the end of Spring Training. Santana's contract ensures he will be paid this money. If he is cut before the end of Spring Training, the Orioles must give him 100k. If he is transferred to extended Spring Training or joins Norfolk, he gets a 100k bonus. To put this money in other terms, Santana is ensured a sum of money that would have been equivalent to a top five international signing for the Orioles.

Base Salary
Upon being shipped down to the minors, which will happen due to Santana needing to regain arm strength to enable him to throw consistently above 80 miles per hour, he will then receive a minor league salary. It has not been reported what this salary would be, but I would imagine he is one of the higher paid players in AAA. That should be worth about 20k a month to him. For April and May, he would take in 40k total. Upon graduation to the Majors on June 1st, he would then receive a pro-rated portion of the MLB minimum. That amount will come to about 100k per month.

Active Roster
If Santana is indeed promoted on June 1st, he receives a bonus of 3 MM regardless of how long he remains on the big league club or how well he does. At this point in time, he will have cost the Orioles nearly three times their 2013 international amateur free agent budget without throwing a single pitch.

Games Started Bonus
Santana's incentives for games started are shown below:

GS

Bonus

5

250

10

350

15

500

20

750

21

150

22

150

23

200

24

200

25

400

Games 22-25 are in italics as we do not expect Santana to reach these incentives given his start date on June 1st. That is to say, we think it is impossible for him to be able to make these starts even if he was completely healthy. There simply does not appear to be time to do so.

Days on Roster Bonus
His incentives for being on the roster are shown below:

Days

Bonus

30

250

60

350

90

500

120

1000

These are important numbers for Santana because it ensures him money in case he is used as a reliever and not as a starter.

But What is Santana Worth?
This is really the question that needs asking. Yes, there are risks associated with resource expenditure in Santana, but we simply cannot look at this move in a vacuum. The point after all is to win the World Series and a shrewd use of resources on a pitcher who could provide mid-rotation performance would be helpful. OK, so who are other pitchers who have gone under the knife for a similar injury?

Those numbers are pretty astounding and show just what is possible although not what is probable. What I would like to suggest is that we have about five different scenarios with Johan Santana. I will only consider him as a starter. I am using this past offseason value for one free agent win, which is roughly 6MM in cost.

Basically, if Santana regains the ability of being an average MLB starter (a high level backend arm for a first division team) then he gets paid what he is worth. Anything short of that and it appears the Orioles pay more than what he is worth. On the front end, that is close to nothing, but is similar to what the team offers their larger international free agent acquisitions. It should also be mentioned that a below average MLB pitcher may be valuable to the club, but one somewhat suspects with arms like Gausman and Matusz around that the benefit will not be all that great.

Conclusion
What we have above in the discussion are basically whispers of probability and value. The truth is that Santana will likely be taking the path of the second scenario. His shoulder injury will still be impacting him and he will not be ready for Major League action on June 1st. This likelihood is probably a near certainty. This near certainty of no value is the cost of 140k. As a reliever, he will be overpaid and, perhaps, redundant. As a starter, he needs that one in a, guessing, thousand shot of being fortunate enough to take the Saberhagen route. That would provide the Orioles with a solid option as a backend arm and prevent the club from dealing more international bonus slots or competitive draft picks. All in all, yes, there is risk, but that risk probably does not matter much.

4 comments:

One in a thousand? LOL! Santana is more accomplished than all the pitchers on your list except Hershiser and Saberhagen. Since Saberhagen made it back, sounds like the empirical evidence suggests a one in two shot. This deal is risk free and your mincing words. If Santana makes it back to the majors, it will be at a high level. He never had a great fastball anyway so the velocity is not a huge concern. All that matters is if his slider comes back.

I am not a statistics expert, but assuming comparing Santana to pitchers with similar injuries is statistically valid, giving an example where 1 out of 8 pitchers came back to pitch effectively and using this example as the basis for approximating Santana's chance of pitching effectively as 1 out of 1000 is absurd. Even though the standard deviation would be ridiculously high with such a small sample size, the nominal probability has to be stated as 1 out of 8. The Orioles front office obviously thought his chances were much closer to 1/8 than 1/1000.

Well, I think there is confusion about the probability of coming back from the type of shoulder injury Santana had and for him to perform at a level he did before his injury. There are odds associated with both of those instances. As written in the article, the figure of 1 in a 1000 is conjecture as presented and it should be taken as such.

So what does he need to do?1. He needs to come back healthy with a successful rehabilitation, which happens, but is not common. Through the injury process and rehabilitation, he needs to maintain mechanics and not injure other muscles, ligaments, etc.2. He likely needs to get back into the low 90s where he was with the Twins and initially with the Mets.3. He needs to retain control.

These are three major steps. I roughly put them all at a 1 in 10 probability. As mentioned, that is conjecture. You should not take a sampling of 8 pitchers to be comprehensive. Based on my knowledge (at most doing some clinical work at the Medical Center--however, I am a toxicologist, so it really is not my specialty), I am doubtful.

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